A Probabilistic Simulation Model to Identify New Generation Investments

A probabilistic simulation model is developed to identify the type and timing of new merchant generation opportunities in a spot electricity market. The annual expected net revenues of new entrants are compared against the static revenue requirements to decide the dynamic investment plans. Short-term and long-term electricity spot price dynamics and stochastic unit scheduling are modelled in this method to calculate the expected generator revenues. Case studies are shown in the paper, applying the proposed model to Australian national electricity market.